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Drywall problems known in 2006 but kept secret

MADE IN CHINA: Awareness of problems spread early, but not to the customers

By AARON KESSLERand JOAQUIN SAPIEN, ProPublica

Published: Friday, June 18, 2010 at 1:00 a.m.

Last Modified: Friday, June 18, 2010 at 12:11 a.m.

At least a half-dozen home builders, installers and environmental consultants knew as early as 2006 that foul smells were coming from drywall imported from China -- but they did not share their early concerns with the public, even when homeowners began publicly complaining about the drywall in 2008.

Facts

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The Herald-Tribune and ProPublica reported last month that two U.S. companies, WCI Communities, a major Florida builder, and Banner Supply, a Miami-based distributor, knew about the problem in 2006. But according to recently released sworn depositions by current and former executives at Banner, other companies also were aware.

The U.S. Consumer Product Safety Commission has since linked the odor to sulfur gases that cause corrosion problems in electrical wiring and appliances like air conditioners. Homeowners have complained of respiratory problems and severe headaches, and the long-term health effects of the air are still being studied.

As WCI was ripping the smelly drywall out of homes on Florida's east coast, the company was selling homes built with the same material on the west coast, including some in the Venetian Golf & River Club in North Venice and Sun City Center in Hillsborough County. Several owners there told the Herald-Tribune and ProPublica that they bought homes from WCI as late as March 2007 -- eight months after the builder had found problems with Chinese drywall -- but received no warning.

When WCI filed for bankruptcy protection in 2008, it promised many homeowners it would fix the contaminated homes once it emerged from bankruptcy. The company exited Chapter 11 bankruptcy protection in September as a privately held company and recently announced plans to build new homes throughout the state. Meanwhile, scores of its former customers are still living in WCI homes built with Chinese drywall.

Calls to WCI executives were routed to its public affairs office, which did not respond to questions, including whether WCI will keep its promise to homeowners.

Banner also did not respond to calls for this story.

One company that suspected that there were problems with Chinese drywall as early as 2006 was PDC Drywall Contractors Inc.

In an interview with the Herald-Tribune and ProPublica, PDC President Peter Cuomo accused Banner of delivering Chinese wallboard to the company's job sites that year against his expressed wishes.

Cuomo said he became aware in 2006 that certain drywall from China had physical differences with American board he considered unacceptable: it crumbled more easily and could not be cut as finely as domestic drywall. More importantly, it did not carry the usual markings and had no warranties -- leaving installers at risk if there was a future problem, Cuomo said.

"I told Banner I didn't want any of it," Cuomo said.

Cuomo said he was unaware of odor problems in 2006, but the other issues were worrisome enough. When one of his workers called to let him know that Banner had delivered several sheets of the problematic board to a construction site, Cuomo said he had the drywall removed and contacted Gus Coffinas, then the head of Banner's Port St. Lucie operation, to complain again.

Coffinas could not be reached for comment.

"I told him we don't want any Chinese board, what's going on here?" Cuomo said. "He promised to take care of it. But that didn't happen."

Cuomo said he put the word out to all his workers to alert him if more of the Chinese board showed up, but heard nothing. It was not until three years later, when the Chinese drywall crisis was being debated publicly, that he discovered dozens of the homes his company worked on had received the problematic board anyway.

"Nobody on the jobs said something to me after that first time. The trouble is they all get paid by what they hang, so I guess there wasn't a motivation to alert me. That, and if you're talking about 300 sheets being there on a job and only five or 20 sheets were Chinese, they might have just missed it," Cuomo said.

Banner did not respond to questions about Cuomo's allegations.

Cuomo said about 40 of the 90 homes that PDC helped build in the Vero Beach development The Antilles have now been confirmed as having Chinese drywall.

"We've found as little as three and up to 30 Chinese boards in the homes," he said. "But it's like being a little bit pregnant. Once you've got a little of it, these homes are having the problems with corrosion and the rest of it."

It was not the first time Cuomo and Coffinas had discussed Chinese drywall. Earlier in 2006, when the housing boom was in full swing and drywall was scarce, Cuomo said a European broker approached him with an offer that sounded almost too good to be true: a train car full of drywall from China, available for a fraction of the market price.

"Banner and other suppliers were charging me $20 a sheet back then, and this guy's offering me a train car's worth for only $3 a sheet," Cuomo said.

There was only one problem: Cuomo did not have a way to unload the car and get the material to his construction sites. So he turned to Coffinas for help.

"I went to Gus and said, 'What do you think, can you help me out? We can both profit.'"

Cuomo said Coffinas never mentioned an odor problem -- instead, he said the board was of poor quality. Cuomo said his company looked at some of the Chinese board and came to the same conclusion. Because of what Coffinas told him, he turned down the discounted board and also told Banner that in the future PDC only wanted American board.

A foul odor

In October 2006 a WCI employee began alerting other Florida builders that Chinese drywall sold by Banner was emitting a foul odor, according to the sworn testimony of Donald "Mickey" Coblentz, a Banner executive.

The WCI employee "was e-mailing builders and telling them that if you have Chinese drywall you have a problem," Coblentz said in testimony that is part of a civil suit against Banner underway in Miami-Dade circuit court. Coblentz added later in his testimony that he had never actually seen one of the e-mails but heard about them from other builders.

Coblentz, who sold WCI and its installer the Chinese drywall, said he offered to remove Chinese drywall that any builder complained about and replace it with American product. He said he replaced material used by at least four different builders and drywall installers.

But Coblentz removed the drywall only for companies who complained to him. Scott Giering, another Banner executive, said in his own testimony that Banner never told its other customers about the company's drywall problems.

In most cases, Coblentz said he only replaced drywall that was sitting in unfinished houses and that had not been installed.

Coblentz said that only two companies actually tore down problematic drywall after it had been installed and asked him to replace it with American product: WCI and GL Homes.

A spokesman for GL Homes did not respond to questions about whether it replaced drywall in 2006, confirming only that the company learned of the odor issue that year from WCI.

As the Herald-Tribune and ProPublica first reported, WCI learned of odor problems in several of its homes as early as July 2006, and commissioned scientific testing. WCI said the testing concluded that drywall manufactured by Knauf Plasterboard Tianjin Co. Ltd. was to blame.

WCI would not comment on its testing. But Patrick M. O'Donnell, president of Pompano Beach-based Enviro Team, confirmed his company did testing in 2006 and that it involved air sampling from homes and sniff testing of the board. He would not disclose any of those results or who the firm had worked for, citing confidentiality.

"We recognized back in 2006 that the wallboard was responsible for the sulfur odors, yes," O'Donnell said. "But we didn't measure anything that indicated a health hazard."

In his deposition, Coblentz said that by mid-October "word was spreading" fast throughout the industry about the drywall problem, but no one contacted customers or regulators.

In late 2006, Palm City-based D&A Construction Services told Banner there was "a bad smell" in the house of one of its customers, Coffinas said in testimony.

David Hatcher, D&A's chief, went to the home and arranged to take "core samples" of the drywall in the home and send them off for testing. Coffinas said he met Hatcher at the house when the core samples were taken. He said three samples were taken, each of which involved cutting "a big circle out of the wall."

The samples were then sent to the "independent lab that Dave had." In his deposition, Coffinas, who was laid off from Banner last fall, could not remember the identity of that lab and said he never saw any of the test results.

Hatcher could not be reached for comment.

Meanwhile, Coffinas also confirmed in his deposition that word of the Chinese board was spreading within the South Florida building industry. In fact, it was being used by Banner's competitors to convince customers to go elsewhere, cutting into Banner's bottom line. "Our competitors were using that as a negative sales tool against us," he said.

<p>At least a half-dozen home builders, installers and environmental consultants knew as early as 2006 that foul smells were coming from drywall imported from China -- but they did not share their early concerns with the public, even when homeowners began publicly complaining about the drywall in 2008.</p><p>The Herald-Tribune and ProPublica reported last month that two U.S. companies, WCI Communities, a major Florida builder, and Banner Supply, a Miami-based distributor, knew about the problem in 2006. But according to recently released sworn depositions by current and former executives at Banner, other companies also were aware.</p><p>The U.S. Consumer Product Safety Commission has since linked the odor to sulfur gases that cause corrosion problems in electrical wiring and appliances like air conditioners. Homeowners have complained of respiratory problems and severe headaches, and the long-term health effects of the air are still being studied.</p><p>As WCI was ripping the smelly drywall out of homes on Florida's east coast, the company was selling homes built with the same material on the west coast, including some in the Venetian Golf & River Club in North Venice and Sun City Center in Hillsborough County. Several owners there told the Herald-Tribune and ProPublica that they bought homes from WCI as late as March 2007 -- eight months after the builder had found problems with Chinese drywall -- but received no warning.</p><p>When WCI filed for bankruptcy protection in 2008, it promised many homeowners it would fix the contaminated homes once it emerged from bankruptcy. The company exited Chapter 11 bankruptcy protection in September as a privately held company and recently announced plans to build new homes throughout the state. Meanwhile, scores of its former customers are still living in WCI homes built with Chinese drywall.</p><p>Calls to WCI executives were routed to its public affairs office, which did not respond to questions, including whether WCI will keep its promise to homeowners.</p><p>Banner also did not respond to calls for this story.</p><p>One company that suspected that there were problems with Chinese drywall as early as 2006 was PDC Drywall Contractors Inc.</p><p>In an interview with the Herald-Tribune and ProPublica, PDC President Peter Cuomo accused Banner of delivering Chinese wallboard to the company's job sites that year against his expressed wishes.</p><p>Cuomo said he became aware in 2006 that certain drywall from China had physical differences with American board he considered unacceptable: it crumbled more easily and could not be cut as finely as domestic drywall. More importantly, it did not carry the usual markings and had no warranties -- leaving installers at risk if there was a future problem, Cuomo said.</p><p>"I told Banner I didn't want any of it," Cuomo said.</p><p>Cuomo said he was unaware of odor problems in 2006, but the other issues were worrisome enough. When one of his workers called to let him know that Banner had delivered several sheets of the problematic board to a construction site, Cuomo said he had the drywall removed and contacted Gus Coffinas, then the head of Banner's Port St. Lucie operation, to complain again.</p><p>Coffinas could not be reached for comment.</p><p>"I told him we don't want any Chinese board, what's going on here?" Cuomo said. "He promised to take care of it. But that didn't happen."</p><p>Cuomo said he put the word out to all his workers to alert him if more of the Chinese board showed up, but heard nothing. It was not until three years later, when the Chinese drywall crisis was being debated publicly, that he discovered dozens of the homes his company worked on had received the problematic board anyway.</p><p>"Nobody on the jobs said something to me after that first time. The trouble is they all get paid by what they hang, so I guess there wasn't a motivation to alert me. That, and if you're talking about 300 sheets being there on a job and only five or 20 sheets were Chinese, they might have just missed it," Cuomo said.</p><p>Banner did not respond to questions about Cuomo's allegations.</p><p>Cuomo said about 40 of the 90 homes that PDC helped build in the Vero Beach development The Antilles have now been confirmed as having Chinese drywall.</p><p>"We've found as little as three and up to 30 Chinese boards in the homes," he said. "But it's like being a little bit pregnant. Once you've got a little of it, these homes are having the problems with corrosion and the rest of it."</p><p>It was not the first time Cuomo and Coffinas had discussed Chinese drywall. Earlier in 2006, when the housing boom was in full swing and drywall was scarce, Cuomo said a European broker approached him with an offer that sounded almost too good to be true: a train car full of drywall from China, available for a fraction of the market price.</p><p>"Banner and other suppliers were charging me $20 a sheet back then, and this guy's offering me a train car's worth for only $3 a sheet," Cuomo said.</p><p>There was only one problem: Cuomo did not have a way to unload the car and get the material to his construction sites. So he turned to Coffinas for help.</p><p>"I went to Gus and said, 'What do you think, can you help me out? We can both profit.'"</p><p>But Cuomo said Coffinas warned him off. "He said, 'You don't want to touch that Chinese board, it's nothing but problems,'" Cuomo recalled.</p><p>Cuomo said Coffinas never mentioned an odor problem -- instead, he said the board was of poor quality. Cuomo said his company looked at some of the Chinese board and came to the same conclusion. Because of what Coffinas told him, he turned down the discounted board and also told Banner that in the future PDC only wanted American board.</p><p><b>A foul odor</p><p></b></p><p>In October 2006 a WCI employee began alerting other Florida builders that Chinese drywall sold by Banner was emitting a foul odor, according to the sworn testimony of Donald "Mickey" Coblentz, a Banner executive.</p><p>The WCI employee "was e-mailing builders and telling them that if you have Chinese drywall you have a problem," Coblentz said in testimony that is part of a civil suit against Banner underway in Miami-Dade circuit court. Coblentz added later in his testimony that he had never actually seen one of the e-mails but heard about them from other builders.</p><p>Coblentz, who sold WCI and its installer the Chinese drywall, said he offered to remove Chinese drywall that any builder complained about and replace it with American product. He said he replaced material used by at least four different builders and drywall installers.</p><p>But Coblentz removed the drywall only for companies who complained to him. Scott Giering, another Banner executive, said in his own testimony that Banner never told its other customers about the company's drywall problems.</p><p>In most cases, Coblentz said he only replaced drywall that was sitting in unfinished houses and that had not been installed.</p><p>Coblentz said that only two companies actually tore down problematic drywall after it had been installed and asked him to replace it with American product: WCI and GL Homes.</p><p>A spokesman for GL Homes did not respond to questions about whether it replaced drywall in 2006, confirming only that the company learned of the odor issue that year from WCI.</p><p>As the Herald-Tribune and ProPublica first reported, WCI learned of odor problems in several of its homes as early as July 2006, and commissioned scientific testing. WCI said the testing concluded that drywall manufactured by Knauf Plasterboard Tianjin Co. Ltd. was to blame.</p><p>WCI would not comment on its testing. But Patrick M. O'Donnell, president of Pompano Beach-based Enviro Team, confirmed his company did testing in 2006 and that it involved air sampling from homes and sniff testing of the board. He would not disclose any of those results or who the firm had worked for, citing confidentiality.</p><p>"We recognized back in 2006 that the wallboard was responsible for the sulfur odors, yes," O'Donnell said. "But we didn't measure anything that indicated a health hazard."</p><p>In his deposition, Coblentz said that by mid-October "word was spreading" fast throughout the industry about the drywall problem, but no one contacted customers or regulators.</p><p>In late 2006, Palm City-based D&A Construction Services told Banner there was "a bad smell" in the house of one of its customers, Coffinas said in testimony.</p><p>David Hatcher, D&A's chief, went to the home and arranged to take "core samples" of the drywall in the home and send them off for testing. Coffinas said he met Hatcher at the house when the core samples were taken. He said three samples were taken, each of which involved cutting "a big circle out of the wall."</p><p>The samples were then sent to the "independent lab that Dave had." In his deposition, Coffinas, who was laid off from Banner last fall, could not remember the identity of that lab and said he never saw any of the test results.</p><p>Hatcher could not be reached for comment.</p><p>Meanwhile, Coffinas also confirmed in his deposition that word of the Chinese board was spreading within the South Florida building industry. In fact, it was being used by Banner's competitors to convince customers to go elsewhere, cutting into Banner's bottom line. "Our competitors were using that as a negative sales tool against us," he said.</p>